Mock 1 — Accounting & statements¶
Take after: Modules 02 and 03. Time: 2 hours, closed book (a calculator is allowed; the course tools are not). Marks: 80 — Part A 30, Part B 30, Part C 20. Pass: 56 (70%). Also used as the placement test in 00.2: 70% or more means you can move quickly through Module 02.
Rules: answer every question; show workings for Parts B and C (method marks are available). Amounts are ₹ crore unless stated. Mark yourself strictly with the answer key and log every miss.
Part A — multiple choice (30 × 1 mark; ~35 minutes)¶
Choose one answer.
A1. Under accrual accounting, revenue is recognised when: (a) cash is received · (b) the invoice is raised · (c) control of the goods or services passes to the customer · (d) the customer places an order
A2. Which is the correct order of Ind AS 115's five steps? (a) identify contract → identify performance obligations → determine price → allocate price → recognise revenue · (b) determine price → identify contract → allocate → recognise → identify obligations · (c) identify contract → determine price → recognise → allocate → identify obligations · (d) identify obligations → identify contract → allocate → determine price → recognise
A3. A company receives ₹12 Cr in March for a service it will deliver over the next twelve months. At 31 March it records: (a) revenue ₹12 Cr · (b) a receivable ₹12 Cr · (c) a contract liability (deferred revenue) ₹12 Cr · (d) nothing
A4. Which item does not appear in the statement of profit and loss? (a) depreciation · (b) dividends paid to shareholders · (c) finance costs · (d) exceptional items
A5. Capital work-in-progress (CWIP) is: (a) an expense in the P&L · (b) fixed assets under construction, not yet depreciated · (c) work done for customers not yet billed · (d) inventory of partly finished goods
A6. A machine costing ₹100 Cr, useful life 10 years, no residual value, is depreciated straight-line. After four years its net book value is: (a) ₹40 Cr · (b) ₹60 Cr · (c) ₹65.6 Cr · (d) ₹100 Cr
A7. If inventory is overstated at the end of the year, then (ignoring tax): (a) COGS is overstated and profit understated · (b) COGS is understated and profit overstated · (c) both COGS and profit are unaffected · (d) only the balance sheet is affected
A8. A deferred tax liability typically arises when: (a) tax depreciation is faster than book depreciation · (b) book depreciation is faster than tax depreciation · (c) the company has tax losses · (d) the tax rate falls
A9. Under Ind AS 116, a lessee's operating-lease rent for a five-year aircraft lease appears in the P&L as: (a) rent expense · (b) depreciation of the right-of-use asset and interest on the lease liability · (c) capital expenditure · (d) a finance cost only
A10. Compared with the old accounting, Ind AS 116 generally: (a) lowers EBITDA · (b) raises EBITDA · (c) leaves EBITDA unchanged · (d) raises net profit in every year
A11. Goodwill arising on an acquisition under Ind AS is: (a) amortised over 10 years · (b) tested for impairment at least annually and not amortised · (c) written off immediately · (d) amortised over the acquired company's remaining life
A12. A lawsuit the company will probably lose, with a reliably estimable loss of ₹20 Cr, should be: (a) disclosed as a contingent liability only · (b) recognised as a provision · (c) ignored until paid · (d) shown as an exceptional item without a provision
A13. In the cash-flow statement, the indirect method starts from: (a) cash receipts from customers · (b) profit before tax (or net profit) · (c) EBITDA · (d) closing cash
A14. An increase in trade receivables during the year, in the indirect-method cash-flow statement, is: (a) added to profit · (b) deducted from profit · (c) shown in investing activities · (d) not shown
A15. For a non-financial company under Ind AS 7, interest paid may be classified as: (a) operating only · (b) financing only · (c) operating or financing, consistently applied · (d) investing
A16. Which is an investing cash flow? (a) dividends paid · (b) purchase of a factory · (c) repayment of a term loan · (d) payment to suppliers
A17. A company's net profit is ₹100 Cr and its CFO is ₹40 Cr. The most likely cause is: (a) high depreciation · (b) a large increase in working capital · (c) a large dividend · (d) a share buyback
A18. In consolidated accounts, a 30%-owned associate is accounted for by: (a) full consolidation · (b) proportionate consolidation · (c) the equity method · (d) fair value through P&L
A19. Non-controlling interest (minority interest) represents: (a) debt owed to minority shareholders · (b) the share of a subsidiary's equity and profit not owned by the parent · (c) the parent's stake in associates · (d) preference capital
A20. Diluted EPS excludes a potential share issue that is: (a) in the money · (b) anti-dilutive · (c) convertible · (d) granted to employees
A21. Under SEBI LODR Regulation 33, a listed company must publish quarterly results within: (a) 30 days · (b) 45 days · (c) 60 days · (d) 90 days of the quarter end
A22. Audited annual results for the fourth quarter and the full year must be published within: (a) 45 days · (b) 60 days · (c) 90 days · (d) six months of the year end
A23. An auditor's Emphasis of Matter paragraph: (a) modifies the opinion · (b) draws attention to a disclosed matter without modifying the opinion · (c) is the same as a qualification · (d) appears only in adverse opinions
A24. A Key Audit Matter is: (a) a qualification · (b) a matter the auditor judged most significant in the audit, with the procedures performed · (c) a fraud the auditor has found · (d) an Emphasis of Matter
A25. Form AOC-2 discloses: (a) the financial summary of subsidiaries · (b) material related-party contracts · (c) director remuneration · (d) CSR spending
A26. CARO 2020 requires the auditor to report, among other things, whether: (a) the company's share price is fair · (b) quarterly returns filed with banks agree with the books · (c) the dividend is sustainable · (d) management's guidance is achievable
A27. "Other comprehensive income" (OCI) includes: (a) revenue from subsidiaries · (b) remeasurement of defined-benefit plans and certain fair-value changes · (c) exceptional items · (d) dividends received
A28. A company capitalises ₹30 Cr of development costs instead of expensing them. In the current year this: (a) reduces profit and CFO · (b) raises profit and moves the outflow from CFO to CFI · (c) raises CFO only · (d) has no effect
A29. Which is not part of working capital? (a) inventories · (b) trade payables · (c) long-term borrowings · (d) trade receivables
A30. In an Indian annual report, the section that describes risks, segment performance and outlook in management's words is: (a) the Directors' Report · (b) the Management Discussion & Analysis · (c) the Corporate Governance Report · (d) the BRSR
Part B — numerical problems (5 × 6 marks; ~45 minutes)¶
B1. Cash to accrual. A small consultancy's cash book shows receipts of ₹520 Cr and payments for expenses of ₹410 Cr for the year. You also learn: (i) credit sales of ₹30 Cr were not collected by year end; (ii) ₹15 Cr of the receipts is an advance for work to be done next year; (iii) ₹12 Cr of the payments is rent prepaid for next year; (iv) salaries of ₹8 Cr for March are unpaid; (v) depreciation for the year is ₹25 Cr. Compute accrual revenue, accrual expenses and profit before tax. Why does it differ from the cash surplus?
B2. Depreciation and deferred tax. A machine costs ₹200 Cr, life five years, residual value ₹20 Cr. (a) Compute straight-line depreciation and the book value after three years. (b) The tax rules allow 40% written-down-value depreciation (ignore residual value for tax). Compute tax depreciation for years 1–3. (c) At a 25% tax rate, what deferred tax liability exists at the end of year 1, and at the end of year 2?
B3. A lease under Ind AS 116. A company leases a building for five years at ₹100 Cr a year, paid at the end of each year; its incremental borrowing rate is 10%. (a) Compute the lease liability and right-of-use asset at inception. (b) For year 1, compute depreciation (straight-line), interest, and the total P&L charge. (c) Compared with expensing ₹100 Cr of rent, what happens to EBITDA, EBIT and profit before tax in year 1? (d) What is the lease liability at the end of year 1?
B4. Working-capital days. Kaveri Pumps (FY26): revenue ₹1,318.0 Cr; cost of materials ₹858.0 Cr; year-end trade receivables ₹346.7 Cr, inventories ₹188.1 Cr, trade payables ₹143.4 Cr. (a) Compute receivable, inventory and payable days (year-end balances, 365 days) and the cash conversion cycle. (b) If receivable days returned to 70, how much cash would be released?
B5. Basic and diluted EPS. Profit after tax ₹120 Cr; 10 Cr shares outstanding all year; 1 Cr employee options with exercise price ₹150 (average share price ₹300); and ₹200 Cr of 8% bonds convertible into 0.8 Cr shares (tax rate 25%). Compute basic EPS and diluted EPS, testing each potential share issue for dilution.
Part C — statement reconstruction (20 marks; ~40 minutes)¶
Tunga Textiles Ltd (fictional). Balance sheet at 31 March 2025 (₹ Cr): cash 20; trade receivables 60; inventory 50; property, plant and equipment (net) 200 — total assets 330. Trade payables 40; short-term borrowings 30; long-term debt 80; share capital 50; reserves 130 — total 330.
Transactions in FY26:
- Sales ₹600 Cr, all on credit; cash collected from customers ₹580 Cr.
- Raw-material purchases ₹380 Cr on credit; payments to suppliers ₹370 Cr. Closing inventory ₹60 Cr.
- Employee costs ₹70 Cr, paid in cash. Other expenses ₹50 Cr, of which ₹45 Cr paid and ₹5 Cr accrued.
- Depreciation ₹25 Cr. Capital expenditure ₹45 Cr, paid in cash.
- Interest at 8% on the opening long-term debt and 10% on the short-term borrowings, paid in cash. Long-term debt of ₹20 Cr repaid at year end; short-term borrowings unchanged.
- Tax at 25% of profit before tax; ₹3 Cr of it unpaid at year end.
- Dividends of ₹15 Cr paid.
Required: (a) the FY26 statement of profit and loss (to profit after tax) — 6 marks; (b) the balance sheet at 31 March 2026, which must balance — 7 marks; (c) the cash-flow statement by the indirect method, classifying interest paid as financing — 7 marks.